Rising homeowners insurance premiums can be a burden — but it’s a cost you might get stuck with.
- It’s important to prepare for your homeowners insurance costs rising over time.
- There are several factors that could lead to higher premium rates, some of which may be out of your control.
The great thing about locking in a fixed-rate home loan is getting to make the same monthly mortgage payment until you own your home outright. But that doesn’t mean homeowners get to enjoy fixed monthly costs on a whole.
In fact, one expense that could easily go up from year to year is your homeowners insurance policy. If your rates recently rose, these could be the reasons behind it.
1. You filed a bunch of claims against your policy
The purpose of having homeowners insurance is to be able to submit a claim when damage to your property occurs so you’re not stuck with exorbitant bills. But the more money you ask your homeowners insurance company to pay out, the more likely it will be to raise your premium rates once your policy is due for renewal.
Does this mean you shouldn’t file a claim against your homeowners insurance policy the next time serious damage occurs? Not at all. If your home sustains $10,000 in damage and your insurance company will pay for all of it minus your $750 deductible, then you should absolutely move forward with a claim. Just don’t be shocked if your premiums rise after the fact.
2. Other policyholders filed a lot of claims
Even if you didn’t file a number of claims with your insurance company (or any claims, for that matter), if other local policyholders recently filed a lot of claims, your costs could go up along with theirs. This sort of thing can happen in the wake of a major storm or weather event. If an insurance company sees a large uptick in claims from the same coverage area, it could raise rates for all insured homes within that area.
3. Construction costs are rising
When determining what premium rate you’re eligible for, your insurance company will take your home’s replacement cost into account. But now, with construction costs being higher, it might take more money to rebuild your home in the event of extreme damage. And so you might see your premiums rate rise to …….